Eastern Michigan University in partial fulfillment of the requirements for
Seminar
EM 695
December 2012
Ypsilanti, Michigan
Academic Integrity Statement
Eastern Michigan University Conduct Code and Judicial Structure for Students and Student Organizations
Academic dishonesty
1. Students are not to engage in any form of academic dishonesty including, but not limited to, plagiarism, alteration of records, substitution of another’s work representing it as the student’s own, and knowing assisting another student in engaging in any such activity. For purposes of this section, plagiarism is defined as the knowing use, without approval, or published materials, expressions, or works of another with intent to represent the material(s) as one’s own.
I hereby acknowledge that I have abided by the above statement in the creation and submission of this assignment.
Table of Contents Academic Integrity Statement 2 Table of Figures 4 Introduction 5 Literature Review 6 Methodology 8 Survey 8 Interview and Observation 8 Results and Discussion 10 Hypothesis 10 Results 10 Conclusion 16 References 17
Introduction
The Defense Acquisition community accounts for a significant amount of the Department of Defense’s expenditures every year. These expenditures are for providing the military forces with the supplies and equipment needed to perform their duty of keeping the country safe. Of these expenditures, there are programs that are not making any technical progress yet funding is provided every year. There are times that even if a program is canceled, it receives a new name and funding is then provided under this new name; therefore, the program truly is not cancelled. In addition, the individual program budgets are padded in such a way that even if some funding is pulled then the programs still have millions of taxpayers’ dollars at their disposal. This study addresses the problem of over spending the taxpayers’ money by the Defense Acquisition community. The purpose of this study is to examine whether any lack of ethics, integrity and accountability of Defense Acquisition professionals when spending the taxpayer’s money exists. Elliott Branch, the Executive Director of Acquisition and Logistics Management at the Office so the Assistant Secretary of the Navy believes “money is the enemy of innovation (Corrin, 2011).” In other words by having such large budgets, innovation is not at the forefront of development resulting in inappropriate spending of taxpayer money. As anyone knows, the U.S.’s current administration is seeking to cut Defense Department spending in the near future as one of the measures to help in the reduction of the budget deficit. These cuts are extensive and through observation and discussions, these are equal cuts across the board at Marine Corps Systems Command. Through this research project, it has been determined that with the proper spending and innovation the negative effect of the budget reductions can be reduced.
Literature Review
Much literature has been written about ethics and doing the right thing. There are even websites dedicated to ethics and related topics. For example, doingtherightthing.com is a website that that is dedicated to influencing people to regain their morals and stop doing things that are not only unethical but also morally wrong. With the topic of this research, it is very important to understand that concept and how it relates to requesting and expending budgets. In addition, Department of Defense Acquisition professionals have a duty to perform their jobs with integrity and honorable intentions that would not create doubt or questions by taxpayers. In 2009 and 2010 the Deputy Secretary of Defense released memorandums to all of his subordinates addressing his expectations and the departments need for ethics, integrity and accountability by all Department of Defense personnel. Acquisition professionals are at the forefront of providing gear to the operating forces but as the Deputy Secretary of Defense reveals in his memorandums this must be done with regard to the taxpayers money.
The statement by Elloitt Branch that money is the enemy of innovation is absolutely correct (Corrin, 2011). Think of it in this regard. A program has a budget of $1000 dollars and needs to procure one computer, then the computer is going to cost $1000. It may have more bells and whistles on it than needed, Now, that same $1000 is required to purchase two computers, having the same requirement, the program will do what it can to spend all $1000 on the equipment. This cycle can go on. The point is, with more money available comes higher prices, but with less money available, people will shop around for the best deal.
There are more policies and procedures in the Defense Acquisition process that can be listed in this report. One specifically that is important to any acquisition professional is the policy on misappropriation of funds as laid out on the Defense Procurement and Acquisition Policy (DPAP) website. One could contend that a lack of innovation can be construed as misappropriation of funds. In addition, without going into specific detail of programs that have been identified in DoD case studies, the DPAP site provides two case studies that are completely relevant to this research project.
Methodology
This is a qualitative research project that used surveys, interviews and observation as the mechanisms to gain the data presented in this article. As a qualitative research project there are no formulas or sets of scientific numerical data to analyze. The hypothesis formed was based on experience prior to conducting this study.
Survey
A brief 10 question survey regarding topics of ethics and budget spending was distributed to 50 acquisition professionals working at Marine Corps Systems Command, Quantico VA, or contracted to provide services support. The survey also consisted of demographic information in order to establish the participant’s duties. The surveys were distributed by email to all participants and returned for review and inclusion with this study. Permission was sought and received from each respondent to provide their names and information as disclosed for the purposes of this study; however, the respondents did not approve; however, the participants did approve the use of other demographic data. Their feedback was of great assistance in preparation of the analysis of the hypothesis presented in the following section along with the aforementioned literature. Of the 50 surveys provided to participants, 80 percent were received back and answered completely.
Interview and Observation
Additionally, five project officers and five financial analysts within the command were interviewed and observed performing their duties in order to gain a personal perspective of their unique positions. The interviews were initiated with the same specific questions to open dialog, then the discussion became an open question answer session based on the topic being discussed. These project officers and financial analysts requested that their identity and programs remain anonymous, therefore in this report there is no mention of the program or person. Keep in mind, this is only a small portion of the Defense Acquisition Community and would require an extensive study to determine the Department of Defense’s overall ethics evaluation in regards to budget requesting and spending.
Results and Discussion
Hypothesis
Upon conducting the literature review and prior to conducting the study, the author perceives that there is deficiency of ethical integrity of Defense Acquisition professionals in regards to budget preparation and budget spending. This is especially prevalent when the budget larger than the actual need for expenditures.
Results
All indications of data received point in direction of supporting the hypothesis; however, due to the size of this study, this determination cannot be officially made at this point for the whole DoD. Additional research on a larger scale would be needed to be performed in order to determine the overall state of spending in the acquisition workforce. Having stated that, there are some very interesting points to be made about data received from the participants. Questions one and two addressed over-estimating “padding” budgets. As can be seen in these figures 1 and 2 below, 75% of the respondents indicated that they pad their budget requests in order to take into account potential cuts made to their programs. In support of that, 88% of the respondents feel that there is nothing wrong with doing that.
Figure 1 Figure 2
In government acquisition programs, the Project Officer and the Financial Analyst are responsible for preparing program “Spend Plans”. The spend plan is a breakdown of how the different types of funding will be allotted to different aspects of the program. These spend plans are based on Research and Development efforts, Operations and Sustainment efforts and Procurement spending. The information gained through discussion with the project officers and financial analysts, provides an understanding of how each element is broken down. In addition to that, it was also determined that there are several taxes automatically placed on each amount of funding. Therefore, because of these taxes, they add the tax to the funding request in order to obtain the full amount of the requested funding. Figures 3 shows that 85% of the respondents prepare the spend plans based on the funding received from their budget request. Figure 4 shows 78% of the respondents disagree or are of no opinion when asked whether the spend plans are prepared based on the actual need.
Figure 3
Figure 4
Respondents were asked about the spending of excess funding to avoid future budget cuts. Interestingly, 75% (figure 5) of the respondents agreed that they would spend the funding to avoid future budget cuts. In talking with the project officers, these individuals stated that it is not a good to spend less funding that is given to the program, because if that happens then they will not receive as much funding the following year. The respondents also indicated that they disagreed when asked if they would not spend the excess funding to avoid budget cuts (Figure 6). In addition, Figure 7 shows that only 50% feel it is ok to spend excess funding to avoid budget cuts. That is a very interesting result in that the other 50% do not agree with it, yet some of them still do it.
Figure 5
Figure 6
Figure 7
In support of this research topic, it was appropriate to determine how the project officers and financial analysts determined best buying power. Figures 8 shows that 58% of the respondents agree that it is important to conduct an analysis of alternatives to make a proper decision on how they should go about spending their money. However when asked as figure 9 depicts, only 35% feel that lowest cost is the best solution. That response makes sense in regards to the data previously presented that they spend money in order to avoid a future budget cut.
Figure 8
Figure 9
The final question of the study asked whether these individuals would spend their personal money the same way they spend their own money and all but one of the 40 respondents either strongly disagreed or disagreed with the statement.
Figure 10
Conclusion
Due to the size of this study, there is not a definitive determination of a lack of ethics of the DoD as a whole, and it is not definitive that Marine Corps Systems Command (MCSC) has an ethics problem throughout the entire command. There however, appears to be a trend that the project officers and financial analysts feel that their budgets are in jeopardy of being reduced if they do not spend their entire budget through the year. One could make an assumption by reviewing the data that this is prevalent through MCSC and potentially further expanding itself through the entire Department of Defense. The DoD is currently operating in an austere environment as it did in the late 70’s and early 80’s. At that time, the services were dealing with the fiscal realities of a post-Vietnam era where the war was over and spending was reduced. This is the same reality the DoD is facing today, the wars in Iraq and Afghanistan are either over or coming to an end, resulting in reduced funding requirements throughout the DoD. Like Elliot Branch said “money is the enemy of innovation” (Corrin, 2011), it becomes imperative that the mindset changes about spending so that the DoD can impart innovation as an initiative. There should be rewards for those acquisition professionals that save the taxpayers money through innovation, and should not be frowned upon or cause punishment to a program if they find a better way to do something at a lower cost.
References
Corrin, A. (2011). Defense acquisition faces uncertain future. Retrieved from: http://defensesystems.com/Articles/2011/01/17/HOME-PAGE-DOD-acquisition-future.aspx?Page=1 DPAP, 2010. Defense Procurement and Acquisition Policy. Retrieved from http://www.acq.osd.mil/dpap/cpic/cp/ethics.html#dod_inspector_general_investigations DEPSECDEF, 2009. Ethics and Integrity in Acquisition. Retrieved from: http://www.acq.osd.mil/dpap/cpic/cp/docs/2a%20Memo%20(signed%20by%20DEPSECDEF).pdf DEPSECDEF, 2010. Ethics, Integrity, and Accountability. Retreived from: http://www.acq.osd.mil/dpap/cpic/cp/docs/Ethics_Integrity_Accountability_Memo_12212010.pdf
OSD, 2012. Department of Defense Management of Unobligated Funds; Obligation Rate Tenets. Retrieved from: https://acc.dau.mil/adl/en-US/532996/file/65734/2012_09_10%20DoD%20Mgt%20of%20Unobligated%20Funds%20pdf%20%20Obligation%20Rate%20Tenets.pdf
DTRT, 2012. Doing the Right Thing. Retrieved from: http://www.doingtherightthing.com/dtrt-home
Mariotti, J. 2011. The Struggle Of Doing The Right Thing. Retrieved from: http://www.openforum.com/articles/the-struggle-of-doing-the-right-thing
Bryant, A. 2009. Integrity is doing the right thing. Retrieved from:
http://selfleadership.com/blog/topic/leadership/integrity-is-doing-the-right-thing/
